New York Attorney General Letitia James is urging the judge in former President Donald Trump’s civil fraud case to overturn the $175 million bond Trump previously posted to appeal his New York civil lawsuit.
In her 26-page complaint, obtained by Fox News Digital, James asks if the insurance firm has enough assets to back it up.
Trump’s bond was posted by California-based Knight Specialty Insurance Company (KSIC), but James argued that the insurer was “not authorized” to write business in New York, stating that it is a small insurer that is not authorized to write business in New York and is not regulated by the state’s insurance department, had never written a surety bond in New York or in the prior two years in any other jurisdiction, and has a total policyholder surplus of only $138 million.
The company’s overall policyholder surplus is only $138 million, according to the filing. According to New York state law, smaller enterprises, such as KSIC, are not allowed to subject themselves to liabilities, such as bonds, or any possible loss more than 10% of their surplus.
“Based on KSIC’s policyholder surplus in its most recent annual financial statement of $138,441,671, the limitation of loss on any one risk that KSIC is permitted to write is $13.8 million,” the lawyers stated in their letter. “The face amount of the bond exceeds this limitation by $161.2 million.”
James also stated in the filing that “KSIC is not qualified to act as the surety under this standard because its management has been found by federal authorities to have operated affiliated companies within KSIC’s holding company structure in violation of federal law on multiple occasions within the past several years.”
“KSIC does not now have an exclusive right to control the account and will not obtain such control unless and until it exercises a right to do so on two days’ notice,” the statement said.
James further stated that the Court should not depend on KSIC’s financial summary, which is attached to the bond, to determine whether the company has adequate ability to issue a $175 million bond.
“That is because KSIC sends 100% of its retained insurance risk to affiliates in the Cayman Islands, where lax regulations allow KSIC to use this risk transfer to reduce the liabilities it carries on its books in a way that artificially bolsters its surplus, a practice New York regulators have dubbed “shadow insurance” and about which they have sounded the alarm,” the filing read.
For these reasons, James suggests that the Court dismiss the Motion and require the defendants to submit a new undertaking within seven days of the Court’s decision.
In September, Judge Arthur Engoron decided that Trump and the Trump Organisation committed fraud while building a real estate empire by deceiving banks, insurers, and others by overvaluing his assets and exaggerating his net worth on documents required to close agreements and secure financing.
In addition, the judge barred Donald Trump Jr. and Eric Trump from functioning as officers or directors of any New York corporation or legal body for the next two years.
The former president has frequently lambasted the case against him, denying any wrongdoing and labelling it a “witch hunt.”
James filed the complaint against Trump, accusing him and the Trump Organisation of deceptive business activities. James charged Donald Jr., Ivanka, and Eric, as well as his acquaintances and enterprises, with “numerous acts of fraud and misrepresentation” on their financial statements.
Trump has pled not guilty to all allegations.
The judge is scheduled to hold a hearing Monday to address the concerns expressed by the attorney general’s office. The hearing will take place with the opening comments in Trump’s New York criminal trial.